Employees Claim Overtime Rule is in Effect

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Employees Claim Overtime Rule is in Effect

June 12, 2017

Though the Department of Labor (DOL) Overtime Exemption rule has been injuncted by a court since November, a new class action lawsuit is challenging the contention that the rule does not need to be followed. On November 22, a federal district court judge issued a preliminary injunction against the rule, effectively blocking it from going into effect on December 1 as written in the rule. (See WICs article, "Federal Court Grants Injunction for DOL Overtime Rule, Suspends Compliance Deadline," November 23, 2016.) As the litigation has worked its way through the court, the injunction has held, with the court not ruling the rule should go back into effect.

However, this new case, brought on behalf of employees of a casual dining restaurant chain, claims that the rule has never been found by a court to be unlawful, and so is in effect and companies should be paying people overtime. This appears to be the first lawsuit of its type to make this claim, a claim that goes against the widely-understood impact of the injunction. A former DOL Wage and Hour official, Paul DeCamp, said, "The argument that the plaintiffs seem to be making is a reach." We will continue to monitor the case and provide updates when more information is known.

The Trump administration has until June 30 to file a brief with the appeals court where the original litigation is still pending. The administration has signaled that it does not support the significantly increased threshold that the rule set, and has not actively pursued defending the rule. Newly-appointed DOL Secretary Alexander Acosta indicated in his confirmation hearings that he felt a more modest update to the threshold would be appropriate rather than the nearly doubling that the rule sought.